The New Zealand currency trended lower against its major rivals in early Asian trading on Thursday as markets reacted to the latest RBNZ decision to leave interest rates unchanged at a record low.
The RBNZ announced it would leave the Official Cash Rate at 2.50 percent, with RBNZ Governor Alan Bollard saying the nation’s economy “is recovering broadly as expected, and growth is predicted to pick-up further through 2010.
The Reserve Bank of New Zealand also signaled that rates would remain at their record low levels until mid-2010. In his accompanying statement, Bollard said increases in the OCR are likely several months away.
“We continue to expect to begin removing policy stimulus around the middle of 2010,” he said.
The decision to hold rates steady was widely predicted by economists, who indicate no changes are likely until release of the government’s budget on May 20.
The New Zealand dollar depreciated 1 percent to reach a 6-day low of 1.3084 against the Australian dollar around 8:00 pm ET from Wednesday’s 8-day high of 1.2934. On the downside, support is likely to be seen around the 1.3280 level for the New Zealand dollar. The aussie-kiwi pair, which closed yesterday’s deals at 1.3050, is presently trading at 1.3070.
The Australian Bureau of Statistics said in a report that the nation’s jobless rate increased 0.1 percent to 5.3 percent in February from a downwardly revised 5.2 percent in January. The number of unemployed Australians increased by 10,700 to 615,900.
Against the Japanese yen, the NZ dollar declined to 63.19 around 8:00 pm ET and thus approaching yesterday’s low of 63.18. The kiwi-yen pair thus shed almost 1.8 percent from Wednesday’s 16-day high of 64.37. The pair that closed Wednesday’s New York session at 63.60 is presently quoted at 63.35.
Japan’s gross domestic product expanded by 0.9 percent in the fourth quarter of 2009 compared to the previous three months, the Cabinet Office said today. That was weaker than expectations for a 1 percent gain compared to the 1.1 percent increase indicated in last month’s preliminary report.
Annualized GDP came in at 3.8 percent, again missing forecasts for a 4.0 percent gain after the 4.6 percent reading in the preliminary report.
The New Zealand dollar slipped to a 2-day low of 0.6986 against the greenback by 8:00 pm ET, down 1.6 percent from yesterday’s 5-week high of 0.7101. The kiwi-buck pair, which closed Wednesday’s North American deals at 0.7024, is presently worth 0.7003 with 0.6960 seen as the next target level.
Yesterday, the Commerce Department reported that wholesale inventories unexpectedly edged down by 0.2 percent in January following a revised 1.0 percent drop in December. The decrease came as a surprise to economists, who had expected inventories to rise by 0.2 percent. Wholesale sales surged up by 1.3 percent in January after increasing by 1.2 percent in the previous month.
Also, the Treasury Department unveiled a $220.9 billion budget deficit in February following a $42.6 billion deficit in the previous month. The figure was largely in-line with the $222 billion budget shortfall forecast by economists.
The New Zealand dollar that surged up to near a 2-year high of 1.9217 against the European currency on Wednesday declined by more than 1.6 percent to reach a 2-day low of 1.9535 around 7:45 pm ET. The euro-kiwi pair that closed yesterday’s deals at 1.9464 is presently quoted at 1.9511. On the downside, the NZ dollar may test support around the 1.959 level.
Looking ahead, French central government balance for January and the final non-farm payrolls figures for the fourth quarter are expected in the upcoming European session. Also, the European Central Bank will release its monthly report at 5:00 am ET.
Turning to the U.S., trade balance for January and weekly jobless claims for the weekended March 6 are expected to influence markets today in the North American session.